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IPO bandwagon getting bigger and bigger; Aug sees 23 filings so far, BFSI News, ET BFSI

Personal Finance

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Mumbai, The raging IPO frenzy has set a record of sorts this month with the first 20 days of August witnessing as many as 23 filings seeking regulatory permission to launch primary share sales worth around Rs 40,000 crore while eight companies already raising over Rs 18,200 crore in the month. Several of these companies are from the startup space such as fintech, e-commerce, online travel and SaaS (software-as-a- service) segments.

So far this year, over 40 new listings have raked in around Rs 70,000 crore. The depth of investor interest, especially from the retail, is very visible with many IPOs being oversubscribed over 100 times and many brokerages say total number of issues may well top the 100-mark this year.

The IPO market is so hot that it has caught the attention of the monetary authority which in its latest bulletin says “year 2021 could well turn out to be the year of IPOs for the country”.

Some of the major filings among the total 23 in the month include the Delhi-based PB Fintech, the promoters of insurance distributor Policybazaar, that is seeking Sebi nod for a Rs 6,000-crore issue; and the Pune-based Emcure Pharma that is seeking to raise Rs 5,000 crore.

Besides, Adani Wilmar, the FMCG arm of the Adani Group, is seeking to mop up Rs 4,500 crore, and the Mumbai-based online fashion and apparel brand Nykaa, whose holding firm FSN E-Commerce, has filed for an Rs 4,000 crore issue.

The list also includes the Gurugram-headquartered Le Travenues Technology, the promoters of online travel booking firm Ixigo, which is looking to collect Rs 1,800 crore from an issue; and Rategain Travel Technologies, the first SaaS (software-as-a-service) company to go public in the country with a Rs 1,500 crore issue; and the Noida-based Rategain is the country’s largest SaaS firm in the hospitality and travel space.

Another main issue is from the Kolkata-based Tarsons Products that manufactures a range of quality lab-ware products. Tarsons has a diversified product portfolio with over 1,700 stock-keeping units across 300 products and operate five manufacturing facilities in Bengal.

Other mid-sized IPOs include the Kochi-based automobile retailer Popular Vehicles & Services which last week filed for a Rs 700-crore issue; beauty care & wellness firm VLCC; Sapphire Foods which operates all the Yum Brands outlets in the country like KFC, Pizza Hut and Taco Bell; Go Fashion India (Go Colors); Fusion Microfinance; and the payment solutions provider AGS Transact Technologies which filed a Rs 800-crore issue on Friday.

And the biggest day for the street was August 4, when four companies–Krsnaa Diagnostics (Rs 1,213 crore), Windlas Biotech (Rs 401 crore in fresh issue and the rest in OFS), Devyani International, which is the largest franchisee of Pizza Hut, KFC and Costa Coffee in the country (Rs 1,838-crore), and Exxaro Tiles that manufactures vitrified tiles (Rs 161-crore) — filed for IPOs.

The companies are buoyed by bumper listings of Clean Science & Technology, GR Infraprojects, Zomato (which was the biggest issue so far this year with Rs 9,300 crore issue) and Tatva Chintan Pharma Chem.

The AGS issue is purely an offer-for-sale of equity shares by promoter Ravi B Goyal and other selling shareholders. Goyal will sell shares worth up to Rs 792 crore through the OFS and other selling shareholders will offload shares worth Rs 8 crore.

Meanwhile, the first 15 days of August saw eight companies successfully completing IPOs and collecting over Rs 18,200 crore in proceeds.

Some of the marquee names that completed the share sale process are the Chennai-based specialty chemicals manufacturer Chemplast Sanmar which raised Rs 3,850 crore; contract development and manufacturing organization Windlas Biotech (Rs 401 crore); home financier Aptus Value Housing (Rs 2,780 crore), the online auto retailing platform Cartrade Tech (Rs 3,000 crore), and drug firm Krsnaa Diagnostics (Rs 1,213 crore), also completed share sale.

Despite an over 20.3 times oversubscription to the Rs 3,000-crore Cartrade issue, the stock made a tepid debut on the Street on Friday and tumbled nearly 8 per cent at close even it opened lower at Rs 1,600, as against the issue price of Rs 1,618.

Besides, Nuvoco Vista Corporation, which has completed the IPO and is set for listing next Monday, is part of the Nirma Group and is among the largest cement and concrete manufacturers, offering a range of products like cement, ready-mix concrete, building materials like adhesives, wall putty, dry plaster, cover blocks, among other.



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Bank of Maharashtra plans to raise up to Rs 2,000 crore through QIP

Banking & Finance

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State-run Bank of Maharashtra is looking to raise up to Rs 2,000 crore through qualified institutional placement (QIP) route before July-end, its Managing Director and CEO A S Rajeev said.

In April this year, the Pune-based lender had received board approval to raise Rs 5,000 crore by way of QIP/rights issue/ preferential issue or by issuing Basel III bonds.

“We are planning to raise around Rs 2,000 crore equity through QIP immediately. The process has already started and we will raise it before July-end,” Rajeev told PTI in an interaction.

The base size of the issue is Rs 1,000 crore and it has a greenshoe option of another Rs 1,000 crore, he said.

Following this equity raise, the Government’s holding in the bank will reduce to below 85 per cent from 94 per cent currently, and the capital adequacy ratio will improve to 17-18 per cent from around 14.49 per cent as of March 31, 2021, Rajeev said.

This fund will be deployed for expansion of the loan book, which the bank is looking to grow by 16-18 per cent to around Rs 1.25 lakh crore in this fiscal from Rs 1.08 lakh crore as of March 31, 2021, he said.

Of the total loan book of the bank at present, the share of corporate loans is 37 per cent and of retail, agriculture and MSME (RAM) segment is 63 per cent, he said adding, “We want the ratio of RAM to the corporate segment to be 65:35 during the current fiscal.” The bank is envisaging a 20-25 per cent growth in the retail, agriculture and MSME (RAM) segment this year. The lender’s corporate loan size is close to Rs 40,000 crore and it is targeting to grow it by another Rs 10,000 crore in this financial year. It has a sanction pipeline of Rs 25,000 crore in the corporate and MSME segments for the current fiscal, he said.

“We have churned our portfolio with improvement in the share of lending to better-rated corporates. This will minimise the delinquencies and attract lower capital requirement,” Rajeev added.

In the corporate segment, the bank will continue lending to better-rated corporates, including sunrise sectors such as infrastructure, pharmaceuticals and FMCG, he said.

Under the government’s Emergency Credit Line Guarantee Scheme (ECLGS), the bank’s total disbursement, so far, is around Rs 2,100 crore, and it plans to lend another Rs 500 crore this year.

Rajeev said the bank’s exposure to the healthcare sector is Rs 2,000-2,400 crore, which is 2 per cent of the total advances portfolio. In April and May, it had already disbursed over Rs 225 crore to the sector.

“We intend to double our portfolio under the healthcare sector and make it 4 per cent of our total advances portfolio during the current fiscal. We have also come out with two to three products in tune with the RBI policy,” he said.

Last month, the RBI had announced an on-tap term liquidity facility of Rs 50,000 crore under which banks can provide fresh lending support to a wide range of entities from the healthcare segment. The government has also announced ECLGS 4.0, under which a 100 per cent guarantee cover to loans up to Rs 2 crore will be provided to hospitals, nursing homes, clinics, medical colleges for setting up on-site oxygen generation plants.

Rajeev further said since the exit from the RBI’s prompt corrective action (PCA) framework in January 2019, the lender has taken several steps to strengthen its balance sheet, which has resulted in a significant improvement in all its financial parameters.

“We have been successful in registering profits quarter on quarter since March 2019. Our net profit rose 41.39 per cent to Rs 550 crore during FY21 from Rs 389 crore in FY20. Operating profit also rose 39 per cent to Rs 3,958 crore in FY21 from Rs 2,847 crore last year,” he said.

The bank’s CASA (Current Account and Savings Account) improved to 54 per cent as of March 31, 2021, which according to Rajeev is one of the best in the banking industry.

The bank has also managed to bring its gross non-performing assets to 7.23 per cent as of March 31, 2021, from 18.64 per cent in September 2018, when it was under PCA. Net NPAs stood at 2.48 per cent as of March 31, 2021.

At present, market capitalisation of the bank stands at Rs 17,500 crore against Rs 3,948 crore as of March 2019, he said. In FY22, the bank is targeting to bring down gross NPA to below 6 per cent and net NPA to below 2 per cent. Net interest margins (NIM) will remain above 3 per cent in this fiscal, he said.

It has set a recovery and upgradation target of Rs 2,500-2,600 crore during the current year. The lender is also expecting Rs 500 crore recovery from written-off accounts in this fiscal, Rajeev said. The lender is looking at opening 200 banking outlets with a hub and spoke model in this fiscal, he added.

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India Inc cut Rs 1.7 lakh crore debt during pandemic, leave banks high and dry, BFSI News, ET BFSI

Banking & Finance

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Ignoring the government exhortations to unleash animal spirits and step up investments in the country, India Inc preferred to play safe during the pandemic.

The corporate world focused on deleveraging high-cost loans through fund raising via bond issuances despite interest rates at an all-time low. This has led to muted credit growth for banks.

According to data analysis SBI research wing, the top 15 sectors with more than 1,000 listed entities reported over Rs 1.7 lakh crore of debt reduction in 200-21.

Refineries, steel, fertilizers, mining & mineral products, and textile alone reduced debt by more than Rs 1.5 lakh crore during FY21.

Fertilizers, mining and minerals, FMCG, cement products, consumer durables, and capital goods were among the sectors where loan reduction of 20 per cent or more was reported during FY21.

According to data from the Reserve Bank of India, loan growth fell to a 59-year low of 5.6% on year as of March 31. Credit was logging a 6.4% in the previous fiscal.

Low interest rates

As interest rates drop to an all-time low, corporates are reducing their loan liabilities to facilitate a lower finance cost, which resulted in the primary issuance of bonds to increase by nine per cent.

The spread of AAA bonds for a 10-year tenor declined from 124 bps in April 2020 to 70 bps in April 2021.

Similarly, the spread for 5 year and 3-year bonds declined from 89 bps and 147 bps in April 2020 to 9 bps and 30 bps in April 2021 respectively.

“This trend is continuing in FY22 also,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

These companies not only reduced their loan liabilities at lower finance cost, but also increased their cash and bank balance by around 35% in March, as compared to March 2020, suggesting a conservative approach to conserve cash during uncertain times.

Corporate willingness for new investments also remains tepid as the economy is still recovering from the second wave.



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A bad day for Indian markets; Sensex down by 900 points while Nifty ends below 14k mark, BFSI News, ET BFSI

Personal Finance

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At close, the Sensex was down 1.94% at 47,409.93, and the Nifty was down 1.91% at 13,967.50. About 1053 shares have advanced, 1809 shares declined, and 141 shares are unchanged. Nifty bank index traded red at Rs 30,284 down by 2.93%, while BSE Bankex ended at 34,334 down by the same percentage.

Amongst the top losers were- Axis Bank at Rs 632 down by 3.99%, followed by HDFC Bank at Rs 1,409 (-3.64%), Induslnd Bank at Rs 820 (-3.42%), ICICI Bank at Rs 522 (-2.92%), PNB at Rs 33 (-2.34%), SBI at Rs 275 (-1.89%),Bandhan Bank at Rs 303 (1.89%) and Kotak Mahindra Bank at Rs 1,765 (-1.66%). While all the major indices traded in the red, Bank of Baroda traded higher at Rs 74 adding 0.27%.

Nifty Financial Services ended at 14,723 down by 2.77%. Amongst the top losers were HDFC at Rs 2,467 down 3.31% followed by Cholamandalam at Rs 410 (-2.40%), Power Finance at Rs 111 (-2.36%), Indiabulls Hsg at Rs 197 (-1.76%),Bajaj Finance at Rs 9,126 (-0.79%).

Other key takeaways

India’s GDP to contract 8% in FY21: FICCI Survey
India’s gross domestic product (GDP) is expected to contract by 8 per cent in 2020-21, according to the latest round of FICCI’s Economic Outlook Survey.

The annual median growth forecast by the industry body is based on responses from leading economists representing industry, banking and financial services sector. The survey was conducted in January. The median growth forecast for agriculture and allied activities has been pegged at 3.5 per cent for 2020-21.


Expert views on the latest IMF‘s GDP projection

Gaurav Garg, Head Research, CapitalVia Global Research Limited – Investment Advisor:
“The IMF on Tuesday projected an impressive 11.5% growth rate for India in 2021, making the country the only major economy of the world to register double-digit growth this year amidst the coronavirus pandemic. This projection could help the Indian market attract more foreign investors which could eventually help the economy to recover even faster.”

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
“IMF revising global GDP growth upwards to 5.5% and India’s growth to 11.5% in 2021 is good news. The sharp turnaround in growth will ensure that the current trend of impressive corporate results will sustain. On the negative side, we had two consecutive days of FII selling in the market. It appears that the market is a bit apprehensive of some budget tax proposals which may not be market-friendly.”

Gold Updates
COMEX gold trades 0.3% lower near $1845/oz after a 0.2% decline yesterday. Gold is pressurized by increasing debate about the US stimulus package and position squaring ahead of the Fed’s monetary policy meeting.

Technically, MCX Gold April is holding a resistance near 49500 levels where its immediate support is at 48900 levels. It could trade within these ranges. MCX Silver March is trading near 66500 level and above which will continue its bullish rally up to 67200-67900 levels. Support is at 65800-65000 levels.

Domestic gold and silver ended flat on Monday. Indian markets are shut on Tuesday on account of Republic Day holiday. Domestic bullion could trade flat-to-marginally lower this Wednesday morning, tracking the international prices.

Bank of Baroda Q3:
Company’s net profit was at Rs 1,061.1 crore in the quarter ended December 2020 against loss of Rs 1,407 crore in the same quarter last year. It net interest income (NII) was up 8.6% at Rs 7,749 crore versus Rs 7,132 crore, reported CNBC-TV18. Its gross NPA was at 8.48% versus 9.14% and net NPA was at 2.39% versus 2.51%, QoQ.

Rupee Updates
Indian rupee erased most of the intraday gains and ended near the day’s low level at 72.92 per dollar, amid profit booking saw in the domestic equity market.It opened flat at 72.94 per dollar against Monday’s close of 72.95 and traded between 72.78-72.94.



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